Navigating the global talent shortage

October 25, 2022

On 27 April 2022 the European Union (EU) took an important step in its goal to attract talent to the EU’s labour market, by publishing its proposals to amend two important pieces of EU legislation: the Single Permit Directive and the Long Term Residence Directive.

The Skills and Talent Package, which is a key focus point under the EU’s New Pact on Asylum and Migration, also included a commitment by the European Commission to seek agreement on proposed changes to the EU Blue Card Directive and a review of the EU Talent Pool, which is a policy measure that aims to link workers outside the EU with employer needs in the EU.

The European Commission argues that increased harmonisation and clarity on processes can have a significant impact on how attractive the EU labour market is for talent outside the EU. These are therefore common themes that emerge from the proposals under the Skills and Talent Package.

Read on for details on the proposed changes to the Single Permit Directive and the Long Term Residence Directive as well as on the final version of the EU Blue Card Directive that was adopted in 2021.

What this means

By revamping these key pieces of EU legislation, the European Commission is seeking to make the EU as a whole more attractive for high-, medium- and low-skilled talent across a variety of sectors. In general, the measures include increasing harmonisation across EU member states, simplifying procedures and promoting intra-EU mobility. As recent reports have shown that the EU is facing significant challenges in attracting key skills that are needed across different regions and industries in the EU, it is likely that such changes will be welcomed by businesses and employers operating across the EU.

How we can help

Member states have until 17 November 2023 to implement the new EU Blue Card Directive into national legislation.  The proposals for the Single Permit Directive and Long Term Residence Directive will be reviewed by the European Parliament and by member states (in the EU Council) and will likely be revised and amended.

Vialto Partners will closely monitor the legislative process to ensure businesses and individuals can prepare for any upcoming changes. 

The Detail 

Single Permit Directive

The Single Permit Directive entered into force in 2011 and ensured that individuals and employers applying for residence and work authorisation in a member state would be able to benefit from more simplified and efficient processes. For example, applicants would only need to submit a single application for combined entry, residence and work authorisation and, after approval, a single approval should be issued.

The European Commission has now submitted proposals aimed at making those rules and processes more efficient.

The main proposed changes are:

  • The possibility for individuals to apply from their home country outside the EU as well as in-country.
  • A maximum of 4 months processing time, including labour market testing and issuance of an entry visa (if applicable).
  • The possibility for the employee to change employer during the permit’s validity.
  • The possibility for the employee to keep the permit for at least another 3 months in the event of unemployment.
  • New provisions on penalties against employers in case of violations of working conditions, freedom of association and access to social security benefits and to introduce complaints mechanisms.

These are welcome changes, as shorter processing times, simplified requirements and increased employee flexibility ensure that non-EU nationals can be hired more easily for positions in the EU. However it remains to be seen whether EU member states will approve the proposals.

Long Term Residence Directive

The EU’s Long Term Residence Directive entered into force in 2003 and in essence ensured harmonisation of requirements and processes for issuance of long term residence status for  non-EU/EEA/Swiss nationals. For example, the Directive specifies that Long Term Residence status must be granted after continuous and legal residence of at least 5 years in the territory of the member state, a maximum processing time of 4 months from date of submission, and common standards for loss of the status as a result of residence outside the member state of issuance or the territory of the EU. In addition, the Directive sets out general conditions for holders of Long Term Residence status in one member state to apply for residence in another member state.

However the Directive is somewhat limited in its effect given that most member states require individuals to pass civic integration and language tests in order to obtain Long Term Residence status. In addition, the Directive allows member states to apply labour market tests to those seeking to work and reside in another member state. As a result the Directive is not widely used in member states that are still permitted to issue long term residence permits on national grounds, and does not promote intra-EU mobility effectively.

The EU Commission has therefore submitted proposals for an amended Long Term Residence Directive.

The main proposed changes are as follows:

  • Periods of residence in other member states will be able to be counted towards the cumulative 5 years required to obtain Long Term Residence status.
  • No labour market testing for persons with a Long Term Residence status in one member state who wish to reside and work in another member state.
  • No labour market testing for family members of Long Term Residence status holders in the member state where the main applicant holds that status.
  • Facilitated family reunification requirements, and family members of a Long Term Residence permit holder that were born in the member state of issuance automatically acquire Long Term Residence status.
  • Reduction of processing time from 4 months to 90 days.
  • Possibility to apply for Long Term Residence status in a member state other than where the status was issued after 3 years residence (instead of 5 years).
  • Permitted absence from the EU without losing Long Term Residence status increased from 1 year to 2 years.

If these changes are adopted by EU member states, it will provide additional grounds for intra-EU mobility for holders of Long Term Residence status. It will also ensure potential applicants will not be limited in their movement within the EU due to a fear of losing accumulated periods of residence in different member states. However, civic integration and language requirements will still generally apply for applicants, which means that it is likely potential applicants will seek to stay within a particular language region, if not a particular member state, for a significant period of time before applying for Long Term Residence status.

Interestingly, a new provision has been added, which specifies that periods of residence in a member state on the grounds of investment will not count towards the cumulative period required to obtain Long Term Residence status. This is clearly aimed at certain member states’ investor and ‘golden’ visa schemes that have been subject to criticism amid reports of abuse. It is likely that many member states will welcome this change.

As with the proposals on the Single Permit Directive, it also remains to be seen whether member states will adopt the proposals. In this respect there may be some additional challenges as individual member states may seek to protect their existing national immigration policies on long term residence.

EU Blue Card Directive

In order to address talent shortages across the EU, the EU Blue Card was introduced in May 2009 as the European equivalent of the US Green Card. The purpose was to make it easier for non EU/EEA nationals to work freely in multiple EU member states within the European Union. However, studies over several years have shown that use of the EU Blue Card category is generally low across member states. Therefore a revision was proposed in 2016 and after long negotiations the revised EU Blue Card Directive entered into force on 17 November 2021. Member states have until 17 November 2023 to implement the amended Directive into national legislation.

The aim of the new Directive is to simplify the procedures and qualifying criteria, and to widen the scope and to strengthen the rights of EU Blue Card holders.

The most important changes are:

  • Facilitated possibility for EU Blue Card holders to undertake business activities in other member states.
  • Minimum duration of an employment contract shortened from 12 months to 6 months.
  • Currently Blue Card holders are allowed to move to another member state after a continuous stay of 18 months. This will be shortened to 12 months.
  • Recognition of professional experience in addition to or instead of educational qualifications.
  • Standard validity of the Blue Card to be increased from 12 months to 24 months, or the length of the contract plus three months.
  • Reduction of processing time from 90 days to 60 days (30 days for employers included in a national trusted employer scheme).
  • Greater flexibility in respect of the salary threshold, which can be between 1 and 1.6 times the average gross salary of the member state, instead of 1.5.

Employers and third-country employees will likely welcome this increased flexibility and simplified qualifying criteria. However it remains to be seen how the EU member states will implement the revised Directive for EU Blue Card holders and their family members. This is despite the fact that the final text has been somewhat watered down after member states were unable to reach an agreement on the initial proposals that were submitted in 2016. For example, the scope of activities that EU Blue Card holders can perform in other member states without a work permit for up to 90 days are generally already permitted for all business visitors regardless of nationality based on national law.

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Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related  entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages

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